Many companies enter into business-to-business (B2B) negotiations in the wrong way. This is because they often fail to communicate properly. Communication in the business world needs to be direct, efficient and not dragged out. You have to respect the other party’s time and commitment. Just as your world should not revolve around theirs, you must realize that neither should their world revolve around yours. By this, I mean that your expectations of the other business should be realistic. However, there are other points to consider when working with another business. Here are just a few of them.
Settle on Terms First
You may be approached by another business who wants to talk about money first. Many business people find that these negotiations end with the other company walking away with a great price while the company offering the great price gets very little in return. Instead, start by finding out exactly what the company wants done. Then, figure out what the project is going to cost you to complete. When you think about your own bottom line first, you know how much you need to charge to make the project realistic for your company.
If you were a company needing sheet metal to help with your product manufacturing, for example, you’d need to go to a spot welding company for assistance. The first thing that you’d need to know is what their charges would be and discuss realistic deadlines. They would then most likely try to figure out how to come up with the most appealing deal that would benefit them financially. After all, another company isn’t going to choose to work with yours unless it is benefiting as well. Because of this, there might need to be some give and take. Don’t expect to get a deal for dirt cheap and be the only one to come out on top. Do your best to be flexible with your budget enough that both parties are financially benefited and happy in the end.
Think About Non-Monetary Benefits
On occasion, the other company may have non-monetary benefits that they can offer you. For example, certain services could be offered as part of the deal. You may also want to negotiate a plug for your company on their website or an introduction to a vendor where you know that they are getting a great price break. Thinking outside the box sometimes helps you build a bigger business through networking.
Prepare Ahead of Time
You never want to enter into business-to-business negotiations without being prepared ahead of time. If the business is publicly held, then the Securities and Exchange Commission filings may show you what the company has paid for services in the past. Learn as much as you can about the current and future needs of the company allowing you to see if this could be the start of a profitable relationship where you can meet ongoing needs. Find out about the person who you will be dealing with during the process. Try to find out who they are currently using to fill the need.
Understand Pain Points
Stop and consider why you want to close this deal. Perhaps, it is a slow period for your company, and you need to make payroll before you have to lay someone off or you need an introduction to another company that they can provide. Also, think about what pain points the potential customer may be experiencing. They may need the project done on a tight timeline or their current contractor has folded. Understand who needs to close the deal more. If the company is going to owe you a substantial payment in the end, then you usually have more leverage.
Use these ideas and your own creative tactics to make sure that you close a favorable deal. Even if the deal fails to close, remember that staying professional at all times may lead to them reconsidering your company in the future.
Guest author, Hannah Whittenly, is a freelance writer and mother of two from Sacramento, CA. She enjoys kayaking and reading books by the lake.